Europe’s rules for non-EU countries could impact
the trading of offshore Indian Rupee futures with exchanges in
Dubai and Singapore already vying for market share in the
The Singapore Exchange (SGX) and the Dubai Gold and
Commodities Exchange (DGCX) represent the two leading offshore
centres for the trading of Rupee derivatives.
DGCX boasts much higher volumes in futures at present but
SGX could be set to benefit from forthcoming European
regulation as its relatively-new offering continues to gain
The European Securities and Markets Authority (Esma) is
reviewing non-EU countries to identify conflicting requirements
with its own clearing and reporting obligations.
The regulator has recommended conditional country
equivalence for Singapore, as part of its technical advices,
for nine non-EU countries including Australia, Hong Kong and
Dubai’s status is as yet unknown. Though DGCX
has applied for CCP recognition under Emir.
DGCX said it would not comment on speculation but Gaurang
Desai, chief operating officer at the exchange, acknowledged
the regulatory arena is undergoing a lot of change at the
Over 100,000 Indian Rupee futures were traded on DGCX during
May, making it the most actively traded outside of India.
This compared to the 18,621 trades on SGX, though the
contract is still growing just eight months after launch.
"We can confirm that DGCX is still trading more than 40% of
the total value of the INR Futures traded globally and we will
continue to see increased interest for our INR contract," said
Countries not seen as equivalent by Esma will likely face
issues when it comes to attracting European trading after the
regulation takes effect.
Both DGCX and SGX have applied to Esma for clearing
recognition under the European Markets Infrastructure
Regulation (Emir) and currently await confirmation.
The Rupee has benefited from recent cutbacks on quantitative
easing in the US, which strengthened emerging market currencies
against the dollar.
The currency has been particularly volatile in comparison to
the dollar over the past decade leading to heightened levels of
trading across exchanges offering Rupee products.